Are defined contributions a new direction for employer-sponsored coverage?
Issue Brief (Center for Studying Health System Change)
|August 16, 2001
Summary
Defined contributions offer employers a strategy to manage rising healthcare costs and liability. This approach involves cash transfers or vouchers, utilizing the individual insurance market and online platforms.
Area of Science:
- Health economics
- Public policy
- Employer-sponsored health insurance
Background:
- Rising healthcare costs present challenges for employers.
- Employer liability and managed care backlash are significant concerns.
- Defined contribution strategies are emerging as potential solutions.
Purpose of the Study:
- To examine defined contribution strategies for health benefits.
- To assess the implications of defined contributions for employers and employees.
- To analyze the role of public policy in defined contribution health benefits.
Main Methods:
- Review of defined contribution concepts and alternatives.
- Analysis of cash transfers, vouchers, and online marketplaces.
- Assessment of issues for stakeholders.
Main Results:
- Defined contributions are promoted to control costs and liability.
- Various implementation methods exist, including individual market reliance and online platforms.
- Key issues for employers, employees, and policymakers are identified.
Conclusions:
- Defined contribution health benefits are a growing trend.
- Understanding implementation nuances is crucial for stakeholders.
- Policy considerations are vital for the success of defined contribution models.
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